# Operating Budget

All files are attached, including instructions

NOTE:  You will be performing this assignment in Excel.  See attached file to get you started.  Let Excel do the work for you.
Each of the budget reports (2017 and 2018) are worth 65 points each.  Points are awarded on the accuracy of the calculations and the appropriate use of the information provided.
You are the financial manager at Savalife Physician Group.  It is budget time.  You have to create the operating budget for the Board meeting in two weeks.  You have the following information:
In 2017 you had the following breakdown of office visits.
Category
# of visits
New Patients

Level 1
100

Level 2
200

Level 3
150
Established Patients

Level 1
10440

Level 2
1950

Level 3
660
Initial Inpatient Consult

20 minutes
900

40 minutes
400

55 minutes
200
Office Consult

30 minutes (level 2)
2000

40 minutes
1500

60 minutes
1800

Savalife bases their operating income on the Price List of Rumford Hospital.  See materials in Week 6 materials.
You are to create an operating budget for 2017 based on the following information (revenues and expenses).  Use the Excel file provided to create the budget.
Information for 2017

Calculate the gross revenue that was generated by Savalife Physician Group in 2017.
Assume that 9% of the revenue was uncollected due to bad debt.
Calculate the net revenue for Savalife for 2017.
There are 4 physicians on staff.

Two make a salary of 198,000 per year
Two make a salary of 220,000 per year

There are 7 staff members

1 office manager makes a salary of 60,000 per year
4 RNs make a salary of 55,000 per year
3 clerical staff make a salary of 37,000 per year

Supplies are based on office visits only (new and established patients).  The supply cost per visit is \$23.50.
You pay professional dues for the nurses and the physicians.

Nurses:  \$180 per year
Physicians:  \$250 per year

Rent for the building and furniture is 15,600 per month
Utilities, phone and the internet cost 5000 per month
Payroll taxes are 20% of the total salaries.

Now that you know the activity for 2017, you must prepare a proposed budget (revenues and expenses) for 2018.  Here are the assumptions for 2018.

Your number of visits and consults will remain the same
35% of your total revenue comes from Medicare
Because you met your value based goals, Medicare will increase your payment by 1% for Medicare patients.
You have improved your collections and therefore, your allowance for doubtful accounts has decreased to 7.5%
The physicians will receive a 5% raise
Your manager will receive a 2% raise
Your nurses will receive a 3% raise
Your Clerical staff will receive a 3.5% raise
Rent will increase to 16000 per month
Payroll taxes are still 20%, but are based on the new total salaries (based on the raises).
All other numbers remain the same.

Make sure to use the attached Excel file to enter in your formulas and results.  Let Excel do the work for you.

How does the 2017 operating budget compare to the 2018 budget?  (10)
If you are the business manager, what areas do you feel you are doing well in?  What areas need to be monitored for improvement? (10)

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